US$780m invested in mining last year

Total investment inflows into the country’s mining sector increased from US$770million in 2010 to US$780million in 2011, latest Chamber of Mines figures have revealed. 

The total mineral revenue of producing-member companies of the Chamber rose from US$3.7billion in 2010 to US$4.8billion in 2011, representing an increase of 28% -- primarily on account of the increased price of gold and manganese in the period.

Gold revenue increased by 28% from US$3.6billion in 2010 to US$4.6billion in 2011 due to an increase in the average realised price, which appreciated by 30% from US$1,219 per ounce in 2010 to US$1,583 per ounce in 2011. 

Gold production however fell by 2% from 2,970,079 ounces in 2010 to 2,924,385 ounces in 2011. The average aggregated cash cost was US$751 per ounce in 2011 compared with the US$684 recorded in 2010, an increase of 9.8%.

Mr. Dan Owiredu, President of the Ghana Chamber of Mines, making a presentation in Accra at the Chamber’s annual general meeting, said: “The mining industry’s favourable impact on the economy and contribution to its overall growth as well as the Ghana Revenue Authority’s collections positively stimulated economic activity. 

The proportion of mineral revenue returned to the country increased appreciably from 68% in 2010 to 75% in 2011.  

“In exercise of its prerogative, government increased the taxes and introduced a windfall profit tax. Although government had not clearly defined the details of the proposed windfall profit tax, the sudden announcement did not only adversely affect values of mining stocks held on international bourses but also led some mining companies to hold back some significant  investment decisions in the sector.”

During the year under review, the industry contributed about 40% of the economy’s total mechanised exports.

The sector accounted for approximately GH¢1billion of government revenue, representing 27.61% of total GRA collections in 2011. 

Mining operators continue to meet their company-tax obligations which cover corporate tax, withholding tax and levies. This was 38.27% of the total company tax that GRA collected in 2011. On this account, the sector maintained its position as the highest contributor of company tax during the year, Mr. Owiredu said. 

Performance of miners

Gold Fields’ Tarkwa mine maintained its position as the leading producer of gold in Ghana. Operational difficulties led to a marginal decrease in production by about 2%, from 735,034 ounces in 2010 to 717,342 ounces in 2011. This was due to a decrease in Carbon-in-Leach (CIL) throughput as a result of harder ore and frequent interruptions in power supply.

Precious Minerals and Marketing Company’s (PMMC’s) total purchases and export of gold from small-scale miners decreased by 32% from 346,861 ounces in 2010 to 235,787 ounces in 2011. Accordingly, PMMC’s exports accounted for only 25% of the volume exported by that segment of the market in 2011. 

Asap-Vasa, a wholly Ghanaian-owned gold refinery, exported 10,173 ounces of gold in 2011 compared with 17,133 ounces in 2010 -- representing a decrease of over 40%.  

On the other hand, Ghana Manganese Company demonstrated a solid 2011 performance with the export of manganese increasing by 53% from 1,193,665 dry tonnes in 2010 to 1,827,692 dry tonnes in 2011. 

Bauxite shipments reduced significantly by 22% from 512,208 tonnes in 2010 to 400,069 tonnes in 2011, leading to a corresponding decrease in export sales from US$15.1million in 2010 to US$13.4million in 2011. 

Local Impact across the Value Chain

The mining companies used their repatriations to the country, equivalent to 75% of gross mineral revenue, to settle their statutory obligations in the form of corporate taxes, mineral royalties and payments of emoluments to employees as well as payments for the supply of local inputs for their operations. 

Dr. Toni Aubynn, CEO of the Ghana Chamber of Mines, said: “The mining industry’s enormous contribution to social and economic growth should convince sceptics to rethink their perceptions about the relevance of the industry as a catalyst for development.

“To underscore its commitment to society, the industry voluntarily contributed about US$44million to its host communities and the general public to support causes that enhance sustainable development.”